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The Ford government’s promised child care tax rebate, expected in Thursday’s provincial budget, won’t help Ontario families seeking quality care, says a Toronto economist and leading expert on the issue.
Officials in Premier Doug Ford’s office did not deny a CBC Radio report Monday quoting government sources saying the rebate will be included in the Progressive Conservatives’ first budget.
U of T economics professor Gordon Cleveland said the rebate would encourage families to seek cheaper, unlicensed care to maximize government support.
While there are still no details on how the rebate would work, the PCs’ election platform said families could receive up to 75 per cent back — to a maximum of $6,500 — on annual child care costs of $9,000. Any type of paid care for kids up to age 15 while parents work or study would be eligible, according to campaign documents.
Under the promise, families earning less than $35,000 a year would receive the maximum rebate while those with incomes between about $50,000 and $100,000 would be eligible to receive a 60 percent rebate worth about $5,400. Families with incomes above $150,000 could get up to 26 percent or about $2,340.
“The cost of child care is a big problem for many families,” said Gordon Cleveland, a University of Toronto economics professor who has written major reports on child care affordability for the City of Toronto and the former Liberal government.
“But this tax credit is likely, on balance, to make things worse rather than better,” he said.
Licensed infant care in the GTA costs parents more than $20,000 a year and preschool care runs at about $14,500, Cleveland noted.
“Even in Ontario’s cheapest city, licensed child care for these ages is over $9,000 per year,” he said. “Most lower-income families who can’t afford child care now will still not be able to afford it.”
A tax credit will provide a strong incentive for families to use more unregulated, low-cost — and low-quality — child care, he said.
“Low-quality, low-fee providers will enter the market and will thrive compared to their higher-quality rivals,” Cleveland predicted, referring to American research on the lack of investment in high-quality options.
Toronto parents Laura Johnson and Jonathan Lowe don’t think a tax rebate of “a couple hundred dollars a month” will do much to make their $30,000 annual child care bill any more affordable.
“I guess a tax credit is better than nothing,” said Johnson whose son Miles, 5, is in before- and after-school care and daughter Adelaide, 2, is in licensed toddler care.
“But it does nothing to address the availability of child care and what a struggle it is to find quality, licensed care,” she said. “It really doesn’t do that much, as far as I’m concerned.”
As described in their election platform, the PC tax rebate is identical to one launched in Quebec in 2009 when that province no longer wanted to expand its highly subsidized non-profit system that costs parents as little as $8.25 a day, Cleveland said.
The Quebec tax rebate sparked an explosion of for-profit centres in the province that fall consistently below internationally recognized quality standards, according to economist Pierre Fortin, professor emeritus at Université du Québec à Montréal.
“There is a huge quality difference,” Fortin said in an interview. “We are preoccupied with quality because it is our children. It is child development that is negatively effected by the fact that the Quebec government expanded in this direction.”
The Ford government's tax credit sets a maximum ($9,000) that is below the cost of good quality child care for preschool children, says U of T economics professor Gordon Cleveland. In this photo, children play at Nelson Mandela Park Public School in March 2018, where former premier Kathleen Wynne announced the Liberal government's election pledge for free licensed child care.
With the Ford government poised to follow Quebec’s lead, “it doesn’t bode well for the future” in Ontario, Fortin said.
Ford spokesperson Simon Jefferies said the government “can’t confirm tax changes that may or may not be in the budget” to be delivered Thursday.
“Premier Doug Ford and the Ontario PCs campaigned on making child care more affordable and accessible, while ensuring parents have the flexibility and choice to make the best decisions for their family,” Jefferies added.
When asked about the rebate Monday, Education Minister Lisa Thompson just smiled and said: “Stay tuned till Thursday.”
At an event in Cambridge last month, Ford was asked by QP Briefing if he would “follow through” on a number of tax cuts and the child care rebate before the next election.
“Well, the gas tax, we already did the 4.3 percent, we have another roughly 4.3, 4.5 percent to go,” the premier said. “So we’ve kept that promise. We’ve kept the $1.1-million tax promise (for low-income earners) and the child care tax cut, we’re going to do that as well.”
Cleveland is concerned the tax rebate, pegged at $389 million a year, is a “gross underestimate” of what it would cost. Based on the number of children using paid child care in Ontario and what families are currently spending, he says taxpayers could be on the hook for more than $2 billion a year.
Even the right-leaning C.D. Howe Institute, which analyzed the PC election proposal in January, said it would cost almost $1 billion a year, Cleveland noted.
Under Ontario’s current child care subsidy system, a family with less than $20,000 in annual income pays no fees for licensed care while a family earning $35,000 a year would pay just $1,500, Cleveland noted.
“Compared to the subsidy system, the Ford tax rebate is just ridiculous,” he said.
Laura Johnson and her husband Jonathan Lowe, shown with their children Miles, 5, and Adelaide, 2, pay about $30,000 a year for child care and don't think a tax rebate will make care more affordable for them. They are seen in their Coxwell and Danforth area home. (Richard Lautens/Toronto Star)
To pay for the rebate, Cleveland and other child care advocates fear the government may shift provincial funding away from fee subsidies and other support for licensed care, such as the $2-an-hour wage grant for chronically low-paid workers in the system. They are also worried the government may cut costs by removing teachers from full-day kindergarten, leaving lower paid early childhood educators to run the program.
If this happens, Ontario families “are very likely to be worse off with the tax credit than without,” Cleveland said.
“Ontario has a well-regulated and high-quality early learning and child care system, including both child care and full-day kindergarten right now,” he said. “It does not make sense to destroy this system and substitute lower-quality education and care services as a solution to the affordability problem. But that, it appears, is exactly the direction the Ford government is pursuing.”